Contact:
Donald A. Davis
Assistant United States Attorney
(616) 456-2404

FOR IMMEDIATE RELEASE

Grand Rapids, Michigan – September 16, 2004 – United States Attorney Margaret M. Chiara and Internal Revenue Service Criminal Investigation Division Acting Special Agent in Charge Sandi Carter announced that John F. Napieralski, age 57, of Cedar Springs, Michigan, was sentenced to thirty months imprisonment, followed by two years supervised release and a $5,000 fine. He must also cooperate with the Internal Revenue Service in filing all back tax returns and paying all taxes due and owing, along with any interest and penalties. This sentence was the result of his June 17, 2004, guilty plea to four counts of tax evasion for the tax years 1997 through 2000, as charged in an April 14, 2004, indictment. This sentence was handed down by United States District Judge Richard Alan Enslen.

On June 17, 2004, the day before a jury was to be selected in his trial, Mr. Napieralski admitted to Judge Enslen that he was guilty of all charges. Mr. Napieralski admitted that he provided accounting services to Sto-Ex, Inc., Kentwood, Michigan, since the 1990s. Mr. Napieralski was associated with various individuals who also have been convicted of tax crimes in the Western District of Michigan, including Orval Dean Russell, Michael John Modena, and Barrie Leslie Konicov. In 1994, Mr. Napieralski created a sham trust called "The Educational Systems Trust" (T.E.S.T.). He caused a checking account to be opened at National City Bank, formerly First of America Bank, and a post office box in Rockford, Michigan, with the help of Mr. Russell, Mr. Modena and others. In a 1994 letter to the Internal Revenue Service, he claimed not to be a United States citizen for "internal" revenue purposes.

Mr. Napieralski admitted that he instructed Sto-Ex, Inc., that all future payments for his services should be made payable to T.E.S.T.. He agreed that, during 1997 through 2003, more than $950,000 was deposited into T.E.S.T.’s bank account, with more than $600,000 in income coming from Sto-Ex, Inc. He also acknowledged that, in 1998, he submitted a document in an attempt to quash an Internal Revenue Service summons in which he claimed not to be a citizen of the United States, nor a resident of the state in which he inhabits, and that he was not a "person" or "United States person." Mr. Napieralski admitted that he willfully attempted to evade and defeat a substantial portion of his income tax due and owing by failing to file tax returns reporting his business gross income received from Sto-Ex, Inc., coupled with affirmative acts of evasion. In a 1994 letter to Barrie Leslie Konicov, Mr. Napieralski stated, "We can create a lot of havoc for the IRS," and that he "[w]as willing to do whatever it takes to win a paper war."

Ms. Carter stated, "IRS Criminal Investigation has made the investigation of abusive trust schemes a national priority, but coupled with a taxpayer falling out of the system based on arguments which have been found by the courts, time after time, to be frivolous, can be a costly detour in one’s life. We stand committed to ensuring that everyone pays their fair share of
taxes."

Ms. Chiara commended the agents of the Internal Revenue Service Criminal Investigation for their work in this investigation. Assistant United States Attorney Donald A. Davis prosecuted this case on behalf of the United States.